India bows to US pressure, cuts Iran oil import by 11%.

NEW DELHI: Indian state-run refiners will import 11% less oil from Iran, the government told Parliament on Tuesday, a day when a US emissary arrived in a bid to wean New Delhi away from Teheran's fuel.

"The target fixed for import of crude oil from Iran for 2012-13 is approximately 15.5 million tonne," minister of state for petroleum R P N Singh told the Upper House in a written reply. He said Indian refiners imported 18.5 million tonne crude from Iran in 2010-11 and 17.44 million tonne in 2011-12.

India imports 80% of its oil requirement and about 12% of this comes from Iran. But refiners have been tying up alternative supplies ever since the RBI scrapped a regional arrangement in December, 2010, that made it difficult to route payments for Iranian oil.

India is one of the biggest buyers of Iranian oil along with China. The US and the EU have been pressuring New Delhi to halt buying crude from Iran as they try to arm-twist Teheran into abandoning its nuclear programme.

The government has steadfastly denied any pressure. But it has also been quietly tying up additional quantities from West Asian oil producers, including Saudi Arabia, and looking at other types of crude that are similar to Iranian crude and suit present refinery configurations.

During her visit here last week, US secretary of State Hillary Clinton had said India needed to do more on cutting Iranian oil purchase and Washington would send a special envoy to help New Delhi along.

On Tuesday, Carlos Pascual, special envoy and coordinator for international energy affairs in the US State Department, held discussions with key Indian officials. Officially, he briefed the Indian officials about the emerging trends in global energy market, especially due to the advent of shale gas.

Increasing supplies of shale gas and oil from huge deposits have depressed Henry Hub - the US benchmark for gas trade - and reduced US demand for LNG, or liquid gas transported in ships, mostly from West Asia and Nigeria. Combined with huge shale gas deposits reported from Argentina, Poland, parts of Africa and China have sparked a worldwide clamour for benchmarking LNG, or liquid gas transported in ships to the Henry Hub rather than more expensive crude and put pressure on LNG producers.

Even Russian president Vladimir Putin recently acknowledged the threat shale gas and oil posed to Russian state-run oil and gas giants, the biggest suppliers outside Opec, and asked them to prepare for a possible new world energy order.

At home, state-run gas utility GAIL has been first to catch the trend by taking stake in a US shale gas firm and tying up shale-LNG at Henry Hub price. This has made it difficult for Petronet, India's biggest LNG player, to tie up additional supplies from Qatar which has indexed its price to crude.

Private sector Reliance Industries, the first Indian firm to acquire US shale gas equity, is also eventually likely to bring shale-LNG to India for marketing through its joint venture with BP.

Source : timesofindia.indiatimes.com